Widget Co has fixed costs of £350,000 and variable costs of £3 per widget. Market research has identified the likely demand based on different selling prices as follows: $\begin{array}{|c|c|}
\hline\text { Sellingprice } & \text { Volume } \
\text { perunit £} & \
\hline 10 & 60,000 \
\hline 11 & 57,000 \
\hline 12 & 52,000 \
\hline13 & 45,000\\hline
\end{array}$
-To maximise profits, Widget Co should sell its widgets at a selling price of:

Question

Widget Co has fixed costs of £350,000 and variable costs of £3 per widget. Market research has identified the likely demand based on different selling prices as follows: $\begin{array}{|c|c|}
\hline\text { Sellingprice  } & \text { Volume } \
\text { perunit  £} & \
\hline 10 & 60,000 \
\hline 11 & 57,000 \
\hline 12 & 52,000 \
\hline13 & 45,000\\hline
\end{array}$
-To maximise profits, Widget Co should sell its widgets at a selling price of:

Quizplus · Accepted Answer

To maximize profits, calculate the profit for each price point: Profit = (Selling Price - Variable Cost) * Volume - Fixed Costs. The highest profit is at £12.

Widget Co Has Fixed Costs of £350,000 and Variable Costs